As the tidal wave of stablecoin frenzy sweeps the globe, the venerable sage of economic wisdom, laureate Jean Tirole, who scooped the Nobel in 2014-seriously, what else was he doing back then, polishing his awards?-clambered forth to caution us against the ominous shadows lurking over the digital currency realm, supposedly due to a hazy debacle of “insufficient supervision” in this sector.
Economist Foresees a Multibillion-Dollar Disaster
On a day as ordinary as any weekday, Jean Tirole let slip the grave concerns gripping his brain over the wild west of stablecoin oversight, vehemently insisting he was “very, very worried”-as if anyone could doubt it. Lest we forget, these digital ephemera are the modern-day, glitch-prone, “perfectly safe deposit” for retail traders. Meanwhile, the revered professor at the Toulouse School of Economics shakes his head, envisioning governments being jerked into “multibillion-dollar bailouts” if these digital apparitions become unruly in a future calamity.
In an interrogation worthy of a sleuth from the Financial Times, the learned one revealed the precarious notion of backing stablecoins with United States government bonds becoming as popular as broccoli at a carnivore’s feast. Why, he droned on, thanks to the pittances gleaned from Treasury debt returns-hello, negative yields!-thusly producing payouts after inflation that resemble famine rations.
Curiously, post-act storybooks say digital assets chained to the US dollar must maintain a stoic one-to-one balance with US dollars or Treasury sanctuary penned under the enigmatic “Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act” in July. As if following a script from a utopian screenplay, the US Treasury Secretary, a chap named Scott Bessent-whose famed “betting” habits are the talk of the town-purportedly regards the crypto industry as a veritable juggernaut set to snatch up US Treasuries like children at a candy store, all the while duty-bound to boost demand for a tsunami of freshly minted US debt.
Treasury Secretary Bessent has reportedly whispered sweet nothings to the likes of Circle and Tether for their insights, signaling an alleged plan to flood the market with short-term bills in the coming quarters. But lo and behold, Paul Donovan, the Grand Wizard of Economics at the financial stagecraft hub UBS, views this spectacle with an amusing skepticism. Stablecoins, according to Donovan, are akin to a financial game of attracting one’s own tail, a merry redistribution-“someone selling Treasury bills to buy stablecoins, which invest the money in Treasury bills, does not change demand for U.S. debt instruments,” he jests.
A Clarion Call for Stablecoin Sleuths
Catering to the global appetite for attention, the stablecoin market ballooned to a sizzling weight of over $280 billion. Last month, the standard-bearer of Goldman Sachs heralded, “we’re at the dawn of a stablecoin bonanza,” forecasting a seismic leap to trillions of our humble dollars.
Tirole divined that stablecoin issuers might be swayed into the very tempting abyss of investing in lures that promise higher yields but coupled with gnashing pits of risk. Such reckless adventures boost the chances of a crisis, inciting a stampede for an exit by token holders.
“If it nests with retail or institutional depositors, who believed it a safe haven of finance, then the state will be dragged kicking and screaming into rescuing them, lest they feel the sting of loss,” he prophesied. Oh, but as he reminds us with a tinge of historical nostalgia, only a select few have come to know the bitter taste of being uninsured at traditional banks in the expensive era of our grand history.
The cautious sentinel Tirole suggests that mitigating the risks of this digital escapade requires a vigilant force armed with ample resources and the will to stifle their internal ambitions. But alas, sniffing at the political underbelly, he quips-this idea has the solidity of a mirage.
However, Bessent-the very emblem of optimism-embraces the notion that recent regulatory strides are not only sufficient but also pave a resplendent road forward for stablecoin expansion. “The GENIUS Act supplies the burgeoning market with a regulatory lantern to burnish its path to a multitrillion-dollar sovereignty,” he proclaimed, airily, in July. Go ahead, ask him if he believes in unicorns.
Read More
- You Won’t Believe Polygon’s Wild Stablecoin Frenzy—But POL Has Other Plans
- FLR PREDICTION. FLR cryptocurrency
- Brent Oil Forecast
- USD HKD PREDICTION
- GBP AED PREDICTION
- Will Crypto Soar as Fed Cuts Rates? 🚀💰
- EUR AED PREDICTION
- SharpLink’s Bold Ethereum Move: $3.6B and Linea’s Layer-2 Magic
- EUR PLN PREDICTION
- KCS PREDICTION. KCS cryptocurrency
2025-09-03 08:15